CANNES-The start of reforms is in place to turn the European economy and banking crisis around. But that doesn't mean there won't be more pain ahead. That was the assessment of Jurgen Stark, a member of the European Central Bank Executive Board from 2006 to 2011, in comments he made at MIPIM here Thursday morning.

The good news is that the economy has bottomed out, and Stark sees a growing GDP, starting with export demand and eventually spreading to investment. As he puts it, “the markets have calmed down.”

Stark denies European culpability as the main driver of the world's economic woes. Rather, he laid the blame at all advanced economies due to what he termed foolishly loose fiscal policy and a “surprising” underestimation of the impact of the housing failure. “No region of the world,” he says, “can ignore” its own fiscal responsibility.

There is more good news in that reforms, put in place at the end of 2012, are starting to have an impact. These reforms—Stark calls them game-changers—include the stabilization of public debt; implementation of structural reforms; and re-organization and recapitalization of the banking sector.

The bad news is that these reforms will take a long while to come to full fruition, including the naming of a single supervisor for the banking system to govern all of Europe. That, says Stark, will not come until 2014.

The challenge is also coming to consensus on the implementation of these reforms given the still-disparate cultures and goals of the 17 countries—and 17 governments—involved.

There can be other derailing behaviors, he says, such as complacency, what he terms “reform fatigue,” and a resultant declining acceptance of reform measures. These risks are fueled by the timeframe for implementation.

He warns investors not to expect the GDP to return to pre-crisis levels, since those were “unrealistically high.” Instead Europe seems to be in the early innings of a game the US is now ending, and a slow recovery has begun.

He does sees construction and real estate growth ahead, but on those same slow-to-turn-around parameters. There might even be a further dip in construction before the full impact of the reforms is felt.